Equipment depreciation life refers to the depreciation life of the equipment. It refers to the time it takes for the equipment to be used from a new state until its original investment is fully recovered through depreciation.
Comparison of equipment depreciation life and equipment natural life:
The natural life of equipment, also known as material life, is the usage time of equipment determined by tangible wear and tear. It refers to the entire time it takes for the equipment to be put into use from a new state until it is scrapped due to severe material wear, causing the shape of the equipment to change, accuracy to decrease, parts to be damaged, or even unusable.
The natural life of equipment can be extended through reasonable use, correct maintenance, and regular repairs, but it cannot solve the fundamental problem of equipment wear. As the use time of equipment continues to increase, wear and tear continues to increase, parts continue to age, work efficiency continues to decrease, and the required maintenance costs continue to increase, resulting in an extremely economically unreasonable use stage. At this time, the natural life of the equipment has not ended, but updating the equipment as soon as possible has become a top priority for the company. Therefore, the natural life of the equipment cannot be the basis for estimating equipment updates.
The depreciation life of equipment refers to the time it takes for the equipment to be used from a new state until its original investment is fully recovered through depreciation. It is based on the service life and depreciation method of fixed assets stipulated in the national financial general principles and financial systems. The original value of the equipment is transferred to the product cost through the depreciation method until the depreciation balance of the equipment reaches or approaches zero. The investment in equipment is usually recovered year by year through depreciation. The depreciation life of equipment is generally not equal to the natural life.